The price stability oriented monetary policy of the ECB: an assessment
The definition of price stability adopted by the ECB has recently been criticized in the literature, particularly for being unable to fully anchor inflation expectations and creating a deflation risk. In the paper empirical evidence is provided against these claims. Despite the unfavourable macroeconomic conditions for the euro area since 2001, monetary policy management has lead to the setting of the policy rate at levels compatible with trend inflation (the long-run inflation forecast) in the range 1–3%, and therefore without affecting negatively the inflation outlook.
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Document Type: Research Article
Affiliations: Department of Economics and Quantitative Methods, Università del Piemonte Orientale, Novara and International Centre for Economic Research (ICER), Turin, Italy
Publication date: 2006-09-20